Schultz Announces 1,000 More Job Cuts at Starbucks

Senior VP-Global Strategy Michelle Gass Shifts Back to Marketing Role as Part of Reorganization

CHICAGO (AdAge.com) -- Starbucks CEO Howard Schultz said the coffee retailer will cut 1,000 jobs in addition to those resulting from the 600 store closures announced earlier this month. It's unclear how many marketing personnel will be affected, but those familiar with the matter said some groups are facing double-digit cuts in what's being described internally as a "bloodbath."
Howard Schultz Credit: AP
In another organizational move, Michelle Gass is back in the marketing department, as senior VP-marketing and category. Ms. Gass, a 12-year Starbucks veteran, is credited with much of the Frappuccino's success. She was elevated to senior VP-global strategy in January, and has been overseeing Mr. Schultz's much-discussed (and debated) turnaround plan. Her move is viewed as a need for her expertise in marketing and product development and not as a demotion. Those familiar with the matter suspected that the research-and-development pipeline had been found wanting.

Mr. Schultz said Ms. Gass' move was to "effectively integrate our marketing, innovation and customer experience." He added that "Michelle's unique experience in both strategy and marketing will provide the organization with a clear focus in this area."

Other execs won't be affected
Starbucks spokeswoman Bridget Baker said Senior VP-Marketing Terry Davenport and Senior VP-Chief Creative Officer Harry Roberts will not be affected by the cuts, but she could not confirm any changes to reporting structure. Both men took their positions in January, as part of Mr. Schultz's initial realignment.
Michelle Gass
Ms. Baker could not quantify layoffs by department. She said 13 areas will be affected by cuts, including partner resources, global finance, information technology, marketing, in-store experience, supply chain organization and global store development.

Starbucks marketing has seen a number of high-profile exits in recent months, including Denny Marie Post, who was senior VP-global food and beverage. Ms. Post is now chief marketer at T-Mobile.

'Cuts go pretty deep'
"For years and years and years, they probably collected some fat," said John Moore, a former Starbucks marketer. "From what we've heard and seen, the cuts go pretty deep probably deeper than some people thought."

Mr. Schultz didn't mince words about difficulties facing the company.

"In the early days of building our company, the naysayers didn't believe in us or that our company would even survive," Mr. Schultz said. "And now, we can hear those drumbeats once again from people who think that our best days are behind us. But I strongly believe that, together, we will create an even stronger company for the future."